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91_SB0338ccr001
LRB9102972PTprccr
1 91ST GENERAL ASSEMBLY
2 CONFERENCE COMMITTEE REPORT
3 ON SENATE BILL 338
4 -------------------------------------------------------------
5 -------------------------------------------------------------
6 To the President of the Senate and the Speaker of the
7 House of Representatives:
8 We, the conference committee appointed to consider the
9 differences between the houses in relation to House Amendment
10 No. 1 to Senate Bill 338, recommend the following:
11 (1) that the Senate concur in House Amendment No. 1; and
12 (2) that Senate Bill 338 be further amended by replacing the
13 title with the following:
14 "AN ACT concerning insurance taxes."; and
15 by inserting after the end of Section 5 the following:
16 "Section 7. The Illinois Income Tax Act is amended by
17 changing Section 201 as follows:
18 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
19 Sec. 201. Tax Imposed.
20 (a) In general. A tax measured by net income is hereby
21 imposed on every individual, corporation, trust and estate
22 for each taxable year ending after July 31, 1969 on the
23 privilege of earning or receiving income in or as a resident
24 of this State. Such tax shall be in addition to all other
25 occupation or privilege taxes imposed by this State or by any
26 municipal corporation or political subdivision thereof.
27 (b) Rates. The tax imposed by subsection (a) of this
28 Section shall be determined as follows, except as adjusted by
29 subsection (d-1):
30 (1) In the case of an individual, trust or estate,
31 for taxable years ending prior to July 1, 1989, an amount
32 equal to 2 1/2% of the taxpayer's net income for the
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1 taxable year.
2 (2) In the case of an individual, trust or estate,
3 for taxable years beginning prior to July 1, 1989 and
4 ending after June 30, 1989, an amount equal to the sum of
5 (i) 2 1/2% of the taxpayer's net income for the period
6 prior to July 1, 1989, as calculated under Section 202.3,
7 and (ii) 3% of the taxpayer's net income for the period
8 after June 30, 1989, as calculated under Section 202.3.
9 (3) In the case of an individual, trust or estate,
10 for taxable years beginning after June 30, 1989, an
11 amount equal to 3% of the taxpayer's net income for the
12 taxable year.
13 (4) (Blank).
14 (5) (Blank).
15 (6) In the case of a corporation, for taxable years
16 ending prior to July 1, 1989, an amount equal to 4% of
17 the taxpayer's net income for the taxable year.
18 (7) In the case of a corporation, for taxable years
19 beginning prior to July 1, 1989 and ending after June 30,
20 1989, an amount equal to the sum of (i) 4% of the
21 taxpayer's net income for the period prior to July 1,
22 1989, as calculated under Section 202.3, and (ii) 4.8% of
23 the taxpayer's net income for the period after June 30,
24 1989, as calculated under Section 202.3.
25 (8) In the case of a corporation, for taxable years
26 beginning after June 30, 1989, an amount equal to 4.8% of
27 the taxpayer's net income for the taxable year.
28 (c) Beginning on July 1, 1979 and thereafter, in
29 addition to such income tax, there is also hereby imposed the
30 Personal Property Tax Replacement Income Tax measured by net
31 income on every corporation (including Subchapter S
32 corporations), partnership and trust, for each taxable year
33 ending after June 30, 1979. Such taxes are imposed on the
34 privilege of earning or receiving income in or as a resident
35 of this State. The Personal Property Tax Replacement Income
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1 Tax shall be in addition to the income tax imposed by
2 subsections (a) and (b) of this Section and in addition to
3 all other occupation or privilege taxes imposed by this State
4 or by any municipal corporation or political subdivision
5 thereof.
6 (d) Additional Personal Property Tax Replacement Income
7 Tax Rates. The personal property tax replacement income tax
8 imposed by this subsection and subsection (c) of this Section
9 in the case of a corporation, other than a Subchapter S
10 corporation and except as adjusted by subsection (d-1), shall
11 be an additional amount equal to 2.85% of such taxpayer's net
12 income for the taxable year, except that beginning on January
13 1, 1981, and thereafter, the rate of 2.85% specified in this
14 subsection shall be reduced to 2.5%, and in the case of a
15 partnership, trust or a Subchapter S corporation shall be an
16 additional amount equal to 1.5% of such taxpayer's net income
17 for the taxable year.
18 (d-1) Rate reduction for certain foreign insurers. In
19 the case of a foreign insurer, as defined by Section 35A-5 of
20 the Illinois Insurance Code, whose state or country of
21 domicile imposes on insurers domiciled in Illinois a
22 retaliatory tax (excluding any insurer whose reinsurance
23 premiums assumed are 50% or more of its total insurance
24 premiums as determined under paragraph (2) of subsection (b)
25 of Section 304, except that for purposes of this
26 determination reinsurance premiums do not include assumed
27 premiums from inter-affiliate pooling arrangements),
28 beginning with taxable years ending on or after December 31,
29 1999 and ending with taxable years ending on or before
30 December 31, 2000, the sum of the rates of tax imposed by
31 subsections (b) and (d) shall be reduced (but not increased)
32 to the rate at which the total amount of tax imposed under
33 this Act, net of all credits allowed under this Act, shall
34 equal (i) the total amount of tax that would be imposed on
35 the foreign insurer's net income allocable to Illinois for
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1 the taxable year by such foreign insurer's state or country
2 of domicile if that net income were subject to all income
3 taxes and taxes measured by net income imposed by such
4 foreign insurer's state or country of domicile, net of all
5 credits allowed or (ii) a rate of zero if no such tax is
6 imposed on such income by the foreign insurer's state of
7 domicile.
8 (1) For the purposes of subsection (d-1), in no
9 event shall the sum of the rates of tax imposed by
10 subsections (b) and (d) be reduced below the rate at
11 which the sum of:
12 (A) the total amount of tax imposed on such
13 foreign insurer under this Act for a taxable year,
14 net of all credits allowed under this Act, plus
15 (B) the privilege tax imposed by Section 409
16 of the Illinois Insurance Code, the fire insurance
17 company tax imposed by Section 12 of the Fire
18 Investigation Act, and the fire department taxes
19 imposed under Section 11-10-1 of the Illinois
20 Municipal Code,
21 equals 1.25% of the net taxable premiums written for the
22 taxable year, as described by subsection (1) of Section
23 409 of the Illinois Insurance Code. This paragraph will
24 in no event increase the rates imposed under subsections
25 (b) and (d).
26 (2) Any reduction in the rates of tax imposed by
27 this subsection shall be applied first against the rates
28 imposed by subsection (b) and only after the tax imposed
29 by subsection (a) net of all credits allowed under this
30 Section other than the credit allowed under subsection
31 (i) has been reduced to zero, against the rates imposed
32 by subsection (d).
33 (3) The provisions of this subsection (d-1) are
34 effective only through December 31, 2000 and cease to be
35 effective on January 1, 2001; but this does not affect
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1 any claim or obligation based upon the use or application
2 of this subsection for tax years ending on December 31,
3 2000 or earlier.
4 (e) Investment credit. A taxpayer shall be allowed a
5 credit against the Personal Property Tax Replacement Income
6 Tax for investment in qualified property.
7 (1) A taxpayer shall be allowed a credit equal to
8 .5% of the basis of qualified property placed in service
9 during the taxable year, provided such property is placed
10 in service on or after July 1, 1984. There shall be
11 allowed an additional credit equal to .5% of the basis of
12 qualified property placed in service during the taxable
13 year, provided such property is placed in service on or
14 after July 1, 1986, and the taxpayer's base employment
15 within Illinois has increased by 1% or more over the
16 preceding year as determined by the taxpayer's employment
17 records filed with the Illinois Department of Employment
18 Security. Taxpayers who are new to Illinois shall be
19 deemed to have met the 1% growth in base employment for
20 the first year in which they file employment records with
21 the Illinois Department of Employment Security. The
22 provisions added to this Section by Public Act 85-1200
23 (and restored by Public Act 87-895) shall be construed as
24 declaratory of existing law and not as a new enactment.
25 If, in any year, the increase in base employment within
26 Illinois over the preceding year is less than 1%, the
27 additional credit shall be limited to that percentage
28 times a fraction, the numerator of which is .5% and the
29 denominator of which is 1%, but shall not exceed .5%.
30 The investment credit shall not be allowed to the extent
31 that it would reduce a taxpayer's liability in any tax
32 year below zero, nor may any credit for qualified
33 property be allowed for any year other than the year in
34 which the property was placed in service in Illinois. For
35 tax years ending on or after December 31, 1987, and on or
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1 before December 31, 1988, the credit shall be allowed for
2 the tax year in which the property is placed in service,
3 or, if the amount of the credit exceeds the tax liability
4 for that year, whether it exceeds the original liability
5 or the liability as later amended, such excess may be
6 carried forward and applied to the tax liability of the 5
7 taxable years following the excess credit years if the
8 taxpayer (i) makes investments which cause the creation
9 of a minimum of 2,000 full-time equivalent jobs in
10 Illinois, (ii) is located in an enterprise zone
11 established pursuant to the Illinois Enterprise Zone Act
12 and (iii) is certified by the Department of Commerce and
13 Community Affairs as complying with the requirements
14 specified in clause (i) and (ii) by July 1, 1986. The
15 Department of Commerce and Community Affairs shall notify
16 the Department of Revenue of all such certifications
17 immediately. For tax years ending after December 31,
18 1988, the credit shall be allowed for the tax year in
19 which the property is placed in service, or, if the
20 amount of the credit exceeds the tax liability for that
21 year, whether it exceeds the original liability or the
22 liability as later amended, such excess may be carried
23 forward and applied to the tax liability of the 5 taxable
24 years following the excess credit years. The credit shall
25 be applied to the earliest year for which there is a
26 liability. If there is credit from more than one tax year
27 that is available to offset a liability, earlier credit
28 shall be applied first.
29 (2) The term "qualified property" means property
30 which:
31 (A) is tangible, whether new or used,
32 including buildings and structural components of
33 buildings and signs that are real property, but not
34 including land or improvements to real property that
35 are not a structural component of a building such as
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1 landscaping, sewer lines, local access roads,
2 fencing, parking lots, and other appurtenances;
3 (B) is depreciable pursuant to Section 167 of
4 the Internal Revenue Code, except that "3-year
5 property" as defined in Section 168(c)(2)(A) of that
6 Code is not eligible for the credit provided by this
7 subsection (e);
8 (C) is acquired by purchase as defined in
9 Section 179(d) of the Internal Revenue Code;
10 (D) is used in Illinois by a taxpayer who is
11 primarily engaged in manufacturing, or in mining
12 coal or fluorite, or in retailing; and
13 (E) has not previously been used in Illinois
14 in such a manner and by such a person as would
15 qualify for the credit provided by this subsection
16 (e) or subsection (f).
17 (3) For purposes of this subsection (e),
18 "manufacturing" means the material staging and production
19 of tangible personal property by procedures commonly
20 regarded as manufacturing, processing, fabrication, or
21 assembling which changes some existing material into new
22 shapes, new qualities, or new combinations. For purposes
23 of this subsection (e) the term "mining" shall have the
24 same meaning as the term "mining" in Section 613(c) of
25 the Internal Revenue Code. For purposes of this
26 subsection (e), the term "retailing" means the sale of
27 tangible personal property or services rendered in
28 conjunction with the sale of tangible consumer goods or
29 commodities.
30 (4) The basis of qualified property shall be the
31 basis used to compute the depreciation deduction for
32 federal income tax purposes.
33 (5) If the basis of the property for federal income
34 tax depreciation purposes is increased after it has been
35 placed in service in Illinois by the taxpayer, the amount
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1 of such increase shall be deemed property placed in
2 service on the date of such increase in basis.
3 (6) The term "placed in service" shall have the
4 same meaning as under Section 46 of the Internal Revenue
5 Code.
6 (7) If during any taxable year, any property ceases
7 to be qualified property in the hands of the taxpayer
8 within 48 months after being placed in service, or the
9 situs of any qualified property is moved outside Illinois
10 within 48 months after being placed in service, the
11 Personal Property Tax Replacement Income Tax for such
12 taxable year shall be increased. Such increase shall be
13 determined by (i) recomputing the investment credit which
14 would have been allowed for the year in which credit for
15 such property was originally allowed by eliminating such
16 property from such computation and, (ii) subtracting such
17 recomputed credit from the amount of credit previously
18 allowed. For the purposes of this paragraph (7), a
19 reduction of the basis of qualified property resulting
20 from a redetermination of the purchase price shall be
21 deemed a disposition of qualified property to the extent
22 of such reduction.
23 (8) Unless the investment credit is extended by
24 law, the basis of qualified property shall not include
25 costs incurred after December 31, 2003, except for costs
26 incurred pursuant to a binding contract entered into on
27 or before December 31, 2003.
28 (9) Each taxable year, a partnership may elect to
29 pass through to its partners the credits to which the
30 partnership is entitled under this subsection (e) for the
31 taxable year. A partner may use the credit allocated to
32 him or her under this paragraph only against the tax
33 imposed in subsections (c) and (d) of this Section. If
34 the partnership makes that election, those credits shall
35 be allocated among the partners in the partnership in
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1 accordance with the rules set forth in Section 704(b) of
2 the Internal Revenue Code, and the rules promulgated
3 under that Section, and the allocated amount of the
4 credits shall be allowed to the partners for that taxable
5 year. The partnership shall make this election on its
6 Personal Property Tax Replacement Income Tax return for
7 that taxable year. The election to pass through the
8 credits shall be irrevocable.
9 (f) Investment credit; Enterprise Zone.
10 (1) A taxpayer shall be allowed a credit against
11 the tax imposed by subsections (a) and (b) of this
12 Section for investment in qualified property which is
13 placed in service in an Enterprise Zone created pursuant
14 to the Illinois Enterprise Zone Act. For partners and for
15 shareholders of Subchapter S corporations, there shall be
16 allowed a credit under this subsection (f) to be
17 determined in accordance with the determination of income
18 and distributive share of income under Sections 702 and
19 704 and Subchapter S of the Internal Revenue Code. The
20 credit shall be .5% of the basis for such property. The
21 credit shall be available only in the taxable year in
22 which the property is placed in service in the Enterprise
23 Zone and shall not be allowed to the extent that it would
24 reduce a taxpayer's liability for the tax imposed by
25 subsections (a) and (b) of this Section to below zero.
26 For tax years ending on or after December 31, 1985, the
27 credit shall be allowed for the tax year in which the
28 property is placed in service, or, if the amount of the
29 credit exceeds the tax liability for that year, whether
30 it exceeds the original liability or the liability as
31 later amended, such excess may be carried forward and
32 applied to the tax liability of the 5 taxable years
33 following the excess credit year. The credit shall be
34 applied to the earliest year for which there is a
35 liability. If there is credit from more than one tax year
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1 that is available to offset a liability, the credit
2 accruing first in time shall be applied first.
3 (2) The term qualified property means property
4 which:
5 (A) is tangible, whether new or used,
6 including buildings and structural components of
7 buildings;
8 (B) is depreciable pursuant to Section 167 of
9 the Internal Revenue Code, except that "3-year
10 property" as defined in Section 168(c)(2)(A) of that
11 Code is not eligible for the credit provided by this
12 subsection (f);
13 (C) is acquired by purchase as defined in
14 Section 179(d) of the Internal Revenue Code;
15 (D) is used in the Enterprise Zone by the
16 taxpayer; and
17 (E) has not been previously used in Illinois
18 in such a manner and by such a person as would
19 qualify for the credit provided by this subsection
20 (f) or subsection (e).
21 (3) The basis of qualified property shall be the
22 basis used to compute the depreciation deduction for
23 federal income tax purposes.
24 (4) If the basis of the property for federal income
25 tax depreciation purposes is increased after it has been
26 placed in service in the Enterprise Zone by the taxpayer,
27 the amount of such increase shall be deemed property
28 placed in service on the date of such increase in basis.
29 (5) The term "placed in service" shall have the
30 same meaning as under Section 46 of the Internal Revenue
31 Code.
32 (6) If during any taxable year, any property ceases
33 to be qualified property in the hands of the taxpayer
34 within 48 months after being placed in service, or the
35 situs of any qualified property is moved outside the
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1 Enterprise Zone within 48 months after being placed in
2 service, the tax imposed under subsections (a) and (b) of
3 this Section for such taxable year shall be increased.
4 Such increase shall be determined by (i) recomputing the
5 investment credit which would have been allowed for the
6 year in which credit for such property was originally
7 allowed by eliminating such property from such
8 computation, and (ii) subtracting such recomputed credit
9 from the amount of credit previously allowed. For the
10 purposes of this paragraph (6), a reduction of the basis
11 of qualified property resulting from a redetermination of
12 the purchase price shall be deemed a disposition of
13 qualified property to the extent of such reduction.
14 (g) Jobs Tax Credit; Enterprise Zone and Foreign
15 Trade Zone or Sub-Zone.
16 (1) A taxpayer conducting a trade or business in an
17 enterprise zone or a High Impact Business designated by
18 the Department of Commerce and Community Affairs
19 conducting a trade or business in a federally designated
20 Foreign Trade Zone or Sub-Zone shall be allowed a credit
21 against the tax imposed by subsections (a) and (b) of
22 this Section in the amount of $500 per eligible employee
23 hired to work in the zone during the taxable year.
24 (2) To qualify for the credit:
25 (A) the taxpayer must hire 5 or more eligible
26 employees to work in an enterprise zone or federally
27 designated Foreign Trade Zone or Sub-Zone during the
28 taxable year;
29 (B) the taxpayer's total employment within the
30 enterprise zone or federally designated Foreign
31 Trade Zone or Sub-Zone must increase by 5 or more
32 full-time employees beyond the total employed in
33 that zone at the end of the previous tax year for
34 which a jobs tax credit under this Section was
35 taken, or beyond the total employed by the taxpayer
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1 as of December 31, 1985, whichever is later; and
2 (C) the eligible employees must be employed
3 180 consecutive days in order to be deemed hired for
4 purposes of this subsection.
5 (3) An "eligible employee" means an employee who
6 is:
7 (A) Certified by the Department of Commerce
8 and Community Affairs as "eligible for services"
9 pursuant to regulations promulgated in accordance
10 with Title II of the Job Training Partnership Act,
11 Training Services for the Disadvantaged or Title III
12 of the Job Training Partnership Act, Employment and
13 Training Assistance for Dislocated Workers Program.
14 (B) Hired after the enterprise zone or
15 federally designated Foreign Trade Zone or Sub-Zone
16 was designated or the trade or business was located
17 in that zone, whichever is later.
18 (C) Employed in the enterprise zone or Foreign
19 Trade Zone or Sub-Zone. An employee is employed in
20 an enterprise zone or federally designated Foreign
21 Trade Zone or Sub-Zone if his services are rendered
22 there or it is the base of operations for the
23 services performed.
24 (D) A full-time employee working 30 or more
25 hours per week.
26 (4) For tax years ending on or after December 31,
27 1985 and prior to December 31, 1988, the credit shall be
28 allowed for the tax year in which the eligible employees
29 are hired. For tax years ending on or after December 31,
30 1988, the credit shall be allowed for the tax year
31 immediately following the tax year in which the eligible
32 employees are hired. If the amount of the credit exceeds
33 the tax liability for that year, whether it exceeds the
34 original liability or the liability as later amended,
35 such excess may be carried forward and applied to the tax
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1 liability of the 5 taxable years following the excess
2 credit year. The credit shall be applied to the earliest
3 year for which there is a liability. If there is credit
4 from more than one tax year that is available to offset a
5 liability, earlier credit shall be applied first.
6 (5) The Department of Revenue shall promulgate such
7 rules and regulations as may be deemed necessary to carry
8 out the purposes of this subsection (g).
9 (6) The credit shall be available for eligible
10 employees hired on or after January 1, 1986.
11 (h) Investment credit; High Impact Business.
12 (1) Subject to subsection (b) of Section 5.5 of the
13 Illinois Enterprise Zone Act, a taxpayer shall be allowed
14 a credit against the tax imposed by subsections (a) and
15 (b) of this Section for investment in qualified property
16 which is placed in service by a Department of Commerce
17 and Community Affairs designated High Impact Business.
18 The credit shall be .5% of the basis for such property.
19 The credit shall not be available until the minimum
20 investments in qualified property set forth in Section
21 5.5 of the Illinois Enterprise Zone Act have been
22 satisfied and shall not be allowed to the extent that it
23 would reduce a taxpayer's liability for the tax imposed
24 by subsections (a) and (b) of this Section to below zero.
25 The credit applicable to such minimum investments shall
26 be taken in the taxable year in which such minimum
27 investments have been completed. The credit for
28 additional investments beyond the minimum investment by a
29 designated high impact business shall be available only
30 in the taxable year in which the property is placed in
31 service and shall not be allowed to the extent that it
32 would reduce a taxpayer's liability for the tax imposed
33 by subsections (a) and (b) of this Section to below zero.
34 For tax years ending on or after December 31, 1987, the
35 credit shall be allowed for the tax year in which the
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1 property is placed in service, or, if the amount of the
2 credit exceeds the tax liability for that year, whether
3 it exceeds the original liability or the liability as
4 later amended, such excess may be carried forward and
5 applied to the tax liability of the 5 taxable years
6 following the excess credit year. The credit shall be
7 applied to the earliest year for which there is a
8 liability. If there is credit from more than one tax
9 year that is available to offset a liability, the credit
10 accruing first in time shall be applied first.
11 Changes made in this subdivision (h)(1) by Public
12 Act 88-670 restore changes made by Public Act 85-1182 and
13 reflect existing law.
14 (2) The term qualified property means property
15 which:
16 (A) is tangible, whether new or used,
17 including buildings and structural components of
18 buildings;
19 (B) is depreciable pursuant to Section 167 of
20 the Internal Revenue Code, except that "3-year
21 property" as defined in Section 168(c)(2)(A) of that
22 Code is not eligible for the credit provided by this
23 subsection (h);
24 (C) is acquired by purchase as defined in
25 Section 179(d) of the Internal Revenue Code; and
26 (D) is not eligible for the Enterprise Zone
27 Investment Credit provided by subsection (f) of this
28 Section.
29 (3) The basis of qualified property shall be the
30 basis used to compute the depreciation deduction for
31 federal income tax purposes.
32 (4) If the basis of the property for federal income
33 tax depreciation purposes is increased after it has been
34 placed in service in a federally designated Foreign Trade
35 Zone or Sub-Zone located in Illinois by the taxpayer, the
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1 amount of such increase shall be deemed property placed
2 in service on the date of such increase in basis.
3 (5) The term "placed in service" shall have the
4 same meaning as under Section 46 of the Internal Revenue
5 Code.
6 (6) If during any taxable year ending on or before
7 December 31, 1996, any property ceases to be qualified
8 property in the hands of the taxpayer within 48 months
9 after being placed in service, or the situs of any
10 qualified property is moved outside Illinois within 48
11 months after being placed in service, the tax imposed
12 under subsections (a) and (b) of this Section for such
13 taxable year shall be increased. Such increase shall be
14 determined by (i) recomputing the investment credit which
15 would have been allowed for the year in which credit for
16 such property was originally allowed by eliminating such
17 property from such computation, and (ii) subtracting such
18 recomputed credit from the amount of credit previously
19 allowed. For the purposes of this paragraph (6), a
20 reduction of the basis of qualified property resulting
21 from a redetermination of the purchase price shall be
22 deemed a disposition of qualified property to the extent
23 of such reduction.
24 (7) Beginning with tax years ending after December
25 31, 1996, if a taxpayer qualifies for the credit under
26 this subsection (h) and thereby is granted a tax
27 abatement and the taxpayer relocates its entire facility
28 in violation of the explicit terms and length of the
29 contract under Section 18-183 of the Property Tax Code,
30 the tax imposed under subsections (a) and (b) of this
31 Section shall be increased for the taxable year in which
32 the taxpayer relocated its facility by an amount equal to
33 the amount of credit received by the taxpayer under this
34 subsection (h).
35 (i) A credit shall be allowed against the tax imposed by
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1 subsections (a) and (b) of this Section for the tax imposed
2 by subsections (c) and (d) of this Section. This credit
3 shall be computed by multiplying the tax imposed by
4 subsections (c) and (d) of this Section by a fraction, the
5 numerator of which is base income allocable to Illinois and
6 the denominator of which is Illinois base income, and further
7 multiplying the product by the tax rate imposed by
8 subsections (a) and (b) of this Section.
9 Any credit earned on or after December 31, 1986 under
10 this subsection which is unused in the year the credit is
11 computed because it exceeds the tax liability imposed by
12 subsections (a) and (b) for that year (whether it exceeds the
13 original liability or the liability as later amended) may be
14 carried forward and applied to the tax liability imposed by
15 subsections (a) and (b) of the 5 taxable years following the
16 excess credit year. This credit shall be applied first to
17 the earliest year for which there is a liability. If there
18 is a credit under this subsection from more than one tax year
19 that is available to offset a liability the earliest credit
20 arising under this subsection shall be applied first.
21 If, during any taxable year ending on or after December
22 31, 1986, the tax imposed by subsections (c) and (d) of this
23 Section for which a taxpayer has claimed a credit under this
24 subsection (i) is reduced, the amount of credit for such tax
25 shall also be reduced. Such reduction shall be determined by
26 recomputing the credit to take into account the reduced tax
27 imposed by subsection (c) and (d). If any portion of the
28 reduced amount of credit has been carried to a different
29 taxable year, an amended return shall be filed for such
30 taxable year to reduce the amount of credit claimed.
31 (j) Training expense credit. Beginning with tax years
32 ending on or after December 31, 1986, a taxpayer shall be
33 allowed a credit against the tax imposed by subsection (a)
34 and (b) under this Section for all amounts paid or accrued,
35 on behalf of all persons employed by the taxpayer in Illinois
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1 or Illinois residents employed outside of Illinois by a
2 taxpayer, for educational or vocational training in
3 semi-technical or technical fields or semi-skilled or skilled
4 fields, which were deducted from gross income in the
5 computation of taxable income. The credit against the tax
6 imposed by subsections (a) and (b) shall be 1.6% of such
7 training expenses. For partners and for shareholders of
8 subchapter S corporations, there shall be allowed a credit
9 under this subsection (j) to be determined in accordance with
10 the determination of income and distributive share of income
11 under Sections 702 and 704 and subchapter S of the Internal
12 Revenue Code.
13 Any credit allowed under this subsection which is unused
14 in the year the credit is earned may be carried forward to
15 each of the 5 taxable years following the year for which the
16 credit is first computed until it is used. This credit shall
17 be applied first to the earliest year for which there is a
18 liability. If there is a credit under this subsection from
19 more than one tax year that is available to offset a
20 liability the earliest credit arising under this subsection
21 shall be applied first.
22 (k) Research and development credit.
23 Beginning with tax years ending after July 1, 1990, a
24 taxpayer shall be allowed a credit against the tax imposed by
25 subsections (a) and (b) of this Section for increasing
26 research activities in this State. The credit allowed
27 against the tax imposed by subsections (a) and (b) shall be
28 equal to 6 1/2% of the qualifying expenditures for increasing
29 research activities in this State.
30 For purposes of this subsection, "qualifying
31 expenditures" means the qualifying expenditures as defined
32 for the federal credit for increasing research activities
33 which would be allowable under Section 41 of the Internal
34 Revenue Code and which are conducted in this State,
35 "qualifying expenditures for increasing research activities
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1 in this State" means the excess of qualifying expenditures
2 for the taxable year in which incurred over qualifying
3 expenditures for the base period, "qualifying expenditures
4 for the base period" means the average of the qualifying
5 expenditures for each year in the base period, and "base
6 period" means the 3 taxable years immediately preceding the
7 taxable year for which the determination is being made.
8 Any credit in excess of the tax liability for the taxable
9 year may be carried forward. A taxpayer may elect to have the
10 unused credit shown on its final completed return carried
11 over as a credit against the tax liability for the following
12 5 taxable years or until it has been fully used, whichever
13 occurs first.
14 If an unused credit is carried forward to a given year
15 from 2 or more earlier years, that credit arising in the
16 earliest year will be applied first against the tax liability
17 for the given year. If a tax liability for the given year
18 still remains, the credit from the next earliest year will
19 then be applied, and so on, until all credits have been used
20 or no tax liability for the given year remains. Any
21 remaining unused credit or credits then will be carried
22 forward to the next following year in which a tax liability
23 is incurred, except that no credit can be carried forward to
24 a year which is more than 5 years after the year in which the
25 expense for which the credit is given was incurred.
26 Unless extended by law, the credit shall not include
27 costs incurred after December 31, 2004, except for costs
28 incurred pursuant to a binding contract entered into on or
29 before December 31, 2004.
30 (l) Environmental Remediation Tax Credit.
31 (i) For tax years ending after December 31, 1997
32 and on or before December 31, 2001, a taxpayer shall be
33 allowed a credit against the tax imposed by subsections
34 (a) and (b) of this Section for certain amounts paid for
35 unreimbursed eligible remediation costs, as specified in
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1 this subsection. For purposes of this Section,
2 "unreimbursed eligible remediation costs" means costs
3 approved by the Illinois Environmental Protection Agency
4 ("Agency") under Section 58.14 of the Environmental
5 Protection Act that were paid in performing environmental
6 remediation at a site for which a No Further Remediation
7 Letter was issued by the Agency and recorded under
8 Section 58.10 of the Environmental Protection Act. The
9 credit must be claimed for the taxable year in which
10 Agency approval of the eligible remediation costs is
11 granted. The credit is not available to any taxpayer if
12 the taxpayer or any related party caused or contributed
13 to, in any material respect, a release of regulated
14 substances on, in, or under the site that was identified
15 and addressed by the remedial action pursuant to the Site
16 Remediation Program of the Environmental Protection Act.
17 After the Pollution Control Board rules are adopted
18 pursuant to the Illinois Administrative Procedure Act for
19 the administration and enforcement of Section 58.9 of the
20 Environmental Protection Act, determinations as to credit
21 availability for purposes of this Section shall be made
22 consistent with those rules. For purposes of this
23 Section, "taxpayer" includes a person whose tax
24 attributes the taxpayer has succeeded to under Section
25 381 of the Internal Revenue Code and "related party"
26 includes the persons disallowed a deduction for losses by
27 paragraphs (b), (c), and (f)(1) of Section 267 of the
28 Internal Revenue Code by virtue of being a related
29 taxpayer, as well as any of its partners. The credit
30 allowed against the tax imposed by subsections (a) and
31 (b) shall be equal to 25% of the unreimbursed eligible
32 remediation costs in excess of $100,000 per site, except
33 that the $100,000 threshold shall not apply to any site
34 contained in an enterprise zone as determined by the
35 Department of Commerce and Community Affairs. The total
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1 credit allowed shall not exceed $40,000 per year with a
2 maximum total of $150,000 per site. For partners and
3 shareholders of subchapter S corporations, there shall be
4 allowed a credit under this subsection to be determined
5 in accordance with the determination of income and
6 distributive share of income under Sections 702 and 704
7 of subchapter S of the Internal Revenue Code.
8 (ii) A credit allowed under this subsection that is
9 unused in the year the credit is earned may be carried
10 forward to each of the 5 taxable years following the year
11 for which the credit is first earned until it is used.
12 The term "unused credit" does not include any amounts of
13 unreimbursed eligible remediation costs in excess of the
14 maximum credit per site authorized under paragraph (i).
15 This credit shall be applied first to the earliest year
16 for which there is a liability. If there is a credit
17 under this subsection from more than one tax year that is
18 available to offset a liability, the earliest credit
19 arising under this subsection shall be applied first. A
20 credit allowed under this subsection may be sold to a
21 buyer as part of a sale of all or part of the remediation
22 site for which the credit was granted. The purchaser of
23 a remediation site and the tax credit shall succeed to
24 the unused credit and remaining carry-forward period of
25 the seller. To perfect the transfer, the assignor shall
26 record the transfer in the chain of title for the site
27 and provide written notice to the Director of the
28 Illinois Department of Revenue of the assignor's intent
29 to sell the remediation site and the amount of the tax
30 credit to be transferred as a portion of the sale. In no
31 event may a credit be transferred to any taxpayer if the
32 taxpayer or a related party would not be eligible under
33 the provisions of subsection (i).
34 (iii) For purposes of this Section, the term "site"
35 shall have the same meaning as under Section 58.2 of the
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1 Environmental Protection Act.
2 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
3 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
4 8-17-97; 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717,
5 eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.)".
6 Submitted on May 25, 1999.
7 s/Sen. William E. Peterson s/Rep. Barbara Flynn Currie
8 s/Sen. Chris Lauzen s/Rep. Frank Mautino
9 s/Sen. Beverly Fawell s/Rep. Larry D. Woolard
10 s/Sen. James Clayborne s/Rep. Art Tenhouse
11 Sen. Patrick Welch s/Rep. Bill Brady
12 Committee for the Senate Committee for the House